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DALAM
MAHKAMAH RAYUAN (BIDANG
KUASA RAYUAN) RAYUAN
SIVIL NO. M - 02- 644- 2003 ANTARA 1.
TANG KWOR HAM 2.
LEE TUCK KWAI 3.
TANG SHEIT FUN (setiap
satu perayu bawa rayuan ini bagi pihak dirinya sendiri dan juga bagi, dalam
tindakan perwakilan dan tindakan terbitan, Tang Kwor Ham Realty Sdn. Bhd. [No.
Syarikat: 5722-X] [responden ke-6] ... PERAYU-PERAYU DAN 1.
PENGURUSAN DANAHARTA NASIONAL BHD. 2.
GAN AH TEE 3.
OOI WOON CHEE 4.
MOHAMED RASLAN BIN ABDUL RAHMAN 5.
6.
TANG KWOR HAM REALITY SDN. BHD. ... RESPONDEN-RESPONDEN (DALAM
PERKARA PERMOHONAN UNTUK KAJIAN
SEMULA KEHAKIMAN NO. 13-2-2002 DALAM MAHKAMAH TINGGI Dalam
perkara Artikel 13 Perlembagaan Persekutuan Dalam
perkara perenggan 1, Jadual kepada Akta Mahkamah –Mahkamah Kehakiman 1964
(Akta 91) Dalam
perkara Bab VI Akta Relief Spesifik 1950 (Akta 137) Dalam
perkara seksyen 132C Akta Syarikat –Syarikat 1965 (Akta 125) Dalam
perkara Akta Pengurusan Danaharta Nasional Bhd 1998 (Akta 587) Dalam
perkara Aturan 53 Kaedah-kaedah Mahkamah Tinggi 1980 Dalam
perkara Tang Kwor Ham Realty Sdn Bhd. ( No. syarikat: 5722-X) ANTARA
(setiap
satu perayu bawa rayuan ini bagi pihak dirinya sendiri dan juga bagi, dalam
tindakan perwakilan dan tindakan terbitan, Tang Kwor Ham Realty Sdn. Bhd. [No.
Syarikat: 5722-X] [responden ke 6] … PEMOHON-
PEMOHON
DAN
... RESPONDEN-RESPONDEN Coram: Gopal Sri Ram,
J.C.A. Hashim Yusof J.C.A Zaleha Zahari J.C.A DISSENTING JUDGMENT OF ZALEHA ZAHARI J.C.A. This is an appeal against the decision of
Y.A Datuk Wira Low Hop Bing J. dated 25.6.2003 dismissing the Appellants’ application
for leave to apply for judicial review. Whether there
has been a breach of O.53 of the Rules of the High Court 1980? A procedural issue arose during
arguments at the hearing of this appeal i.e. whether the presence of a putative
Respondent (in this case, the 1st Respondent, hereinafter referred
to as “Danaharta”) at the hearing of the Appellants’ ex parte leave application for judicial review, and the decision
of the Judge to allow Danaharta’s Counsel to furnish written submissions,
constitutes non-compliance of Order 53 of the Rules of High Court 1980 (“the
Rules”)? My understanding of the law and the
authorities cited, are as follows: Order 53 of the Rules envisages a two
stage process. An applicant must first
obtain leave [O.53 r.3 (1)], which application must be made ex parte to a Judge-in-Chambers, supported by a Statement setting out the
name and description of the applicant, the relief sought and the grounds on
which it is sought, supported by affidavits verifying the facts relied on. The applicant must give notice of the
application for leave not later than three days before the hearing date to
the Attorney General’s Chambers [O.53 r.3(3)], and must at the same time
lodge in those Chambers copies of the Statement and affidavits. If leave is granted, the Applicant must
then file the substantive motion within 14 days after the grant of such leave
and must serve the same on all persons directly affected by the application not
later than 14 days before the date of hearing specified in the substantive
motion. From the Appeal Record it would appear
what transpired at the High Court was this. On 13.2.2003, when the ex parte application
for leave was called for hearing before Y.A Low Hop Bing J., having been notified
pursuant to O. 53 r. 3(3), Dato’ Mary Lim Thiam Suan, Senior Federal Counsel,
appeared for the Attorney General. Counsel for Danaharta, Ms Jeyanthini
Kannaperan, was also present. The
other Respondents were not present. From the Notes recorded it could be
inferred that by reason of no one taking objection to Danaharta’s Counsel presence
at the ex parte hearing, be it the Court by reason of Ms.
Kannaperan’s presence being not at its invitation, nor by the Appellants’
Counsel by reason of the application being an ex parte one, as well as the Senior Federal Counsel, (who, as the
representative of the Attorney General had the right of appearance), the
Judge proceeded to hear submissions of the Appellants’ Counsel. Mid-way
through the Appellants Counsel’s submissions the learned Judge decided to
proceed by way of written submissions. Directions were then given as to the
time frame within which the parties present before him were required to
furnish their written submissions. The
learned Judge then fixed 4.6.2003 as the date when decision would be
delivered. Pursuant to the Court’s directions
written submissions were then filed and exchanged. It is observed that the Appellants
Counsel’s written submissions was substantive
running over 30 pages of small print at pages 65-80 and 105-121 of the Appeal
Record. In their written submissions the Appellants’ Counsel, in highlighting
their complaint, in setting out their arguments on the facts and law in
support of their various contentions, made reference to the facts and documents
held out by them in their supporting affidavits. From the Appellants Counsel’s written
submissions it can be concluded that the nature of matters under challenge were
such that the Appellants’ Counsel had to enter into the realm of facts. In such a situation the response of the
Senior Federal Counsel in meeting the matters in issue (pages 81-104 and
132-136 of the Appeal Record) was equally substantive. With respect, I am of
the considered opinion that a submission which necessarily had to meet all of
the matters in issue cannot be considered as “strenuous”. As for Danaharta’s Counsel, who was present
at the hearing of ex parte leave
application not at the Court’s invitation, and equally accorded an opportunity by the Court to furnish
written submissions, based on the record, with respect, there appears to be
no basis for one to conclude that the conduct of Danaharta’s Counsel was such
that she considered herself entitled as of right to appear, nor be considered
to have demanded that she be heard and to have converted the ex parte proceedings into a full blown
opposed ex parte hearing on the
merits of the application. I observe that the written submissions filed
by Danaharta’s Counsel made reference to the Senior Federal Counsel’s written
submissions and of “adopting” the same. The fact that Danaharta and the
Senior Federal Counsel had similar views in respect of matters in issue is clear
from the Grounds of Judgment of the learned Judge itself. In dealing with the
Respondents contentions, the learned Judge referred to the stand taken by the
Attorney General and Counsel for Danaharta as “a common stand”. Although the Rules provides for leave
application for judicial review to be made ex parte, from the authorities cited there have been several instances
where putative Respondents have been given the opportunity of being heard, the
objections of which is not necessarily confined to arguments on extension of the
time frame prescribed by the Rules for the filing of an application for judicial
review. For example, in Sivarasah
Rasiah v. Badan Peguam Malaysia & Anor (2002) 2 MLJ 413, the Respondents to the application for leave
was present at the hearing of the ex parte
application and the appeal there from.
Both Respondents were heard and the objections were upheld by the Judge at
first instance. Neither the Court of first instance, nor the Court of Appeal,
found the presence of the Respondents at the application for leave for
judicial review, and at the subsequent
appeal, objectionable. The Supreme Court in Tuan Haji Sarip Hamid v. Patco Malaysia Berhad (1995) 4
AMR 1759) held that the Court may itself on its own motion invite a putative
respondent to attend and make representations as to whether or not leave
should be granted. Thus, in a situation like the present, where
Counsel for a putative Respondent is present on the hearing date and is
desirous of being heard at leave stage, I am of view that it is essentially a
matter of discretion of the Judge. In a
situation where no one took issue with Danaharta’s Counsel presence at the commencement
of hearing of the ex parte
application, nor when directions were given as to the furnishing of written
submissions, there is nothing which entitles me to say that that the learned Judge
was in error when he accorded Danaharta’s Counsel the opportunity of furnishing
written submissions and be considered to have been in breach of the procedure
prescribed by O.53. Further, on the facts of this
particular case, taking into consideration the fact that the learned Judge was
already seized of the issues raised by Danaharta as those issues were the
very same issues raised by the learned Senior Federal Counsel, the position would
accordingly have been the same even if Counsel for Danaharta had not appeared
and furnished the written submissions which she did. For the above mentioned reasons given, with
respect, I am of the considered opinion that nothing turns on the procedural
point raised at the hearing of this appeal as to Danaharta’s presence and in being
accorded an opportunity of being heard at the ex parte leave stage. I will now consider the appeal on its
merits. The Memorandum of Appeal In their the Memorandum of Appeal the
Appellants contended that the learned Judge had erred in law and facts as follows: (a) in holding that the 2nd to 4th
Respondents in the context of the proceedings filed were not “public
authorities” pursuant to O.53 r. 2(4) of the Rules, and in not holding that
Danaharta in the context of the proceedings filed was a “public authority”
under O 53 r. 2(4); (b) in holding that the Appellants had not made
out an arguable case; (c) in holding that
the exceptions to the rule in Foss v.
Harbottle in relation to fraud on the minority is not applicable in
proceedings relating to public remedies.
Whether
the Workout Proposal was a “decision” of a “public authority” amenable to judicial review ? The bodies/entities cited by the
Appellant as Respondents (with the
exception of the 6th Respondent who has been cited as a nominal
Respondent), have each a different role to play in respect of the company
with the non-performing loan culminating in the “decision” of the secured
creditors at the meeting held on 27.9.2002. The Appellants’ contention was
that the several Respondents, the maker of the Workout Proposal, the body
approving it, as well as the body advising on the same, were “public
authorities” whose “decisions” were amenable to be judicially reviewed. In making a considered
decision on this
issue cognizance is given to the following facts: Danaharta is incorporated under the
Companies Act 1965 [section 3 of Pengurusan Danaharta Nasional Berhad Act
1998 [hereinafter referred to as “Act 587”]. Apart from its Memorandum and Articles of
Association, its powers are as conferred by the Act 587. It is overseen by an Oversight
Committee consisting of public authorities pursuant to section 22(2). Section 24 empowers Danaharta to
recommend to the Oversight Committee for the appointment of a Special
Administrator of any affected company. Upon being so appointed the Special
Administrator is empowered to take into his custody and control the assets of
the company over which he is appointed and manage the same [section 31(1) and
(2)]. In administrating the affected company, the Special Administrator is
deemed to be acting as the agent of the affected company [section 32]. The Special Administrator is required to
prepare a proposal for Danaharta’s consideration, setting out his plan for
the affected company [section 44(1)] which include, inter alia, a sale of all or part of the undertaking or property
of the company [section 44(1B)(c)]. On the facts of this case the persons appointed
as Special Administrators for the purposes of Act 587 to administer the
assets of the 6th Respondent and under a statutory duty to submit
a “proposal” for the consideration of Danaharta has been cited under their
individual names as the 2nd, 3rd and 4th
Respondent. Upon receipt of such a proposal from
the Special Administrator, Danaharta
is then required to submit the proposal to an Independent Advisor appointed
under section 26, who is then required to make an appraisal of the proposal
and to give its advise on the same [section 44(2)]. Danaharta is then
required to consider the same [section
45]. Upon Danaharta approving the proposal,
the Special Administrator is then under a duty to send the proposal together
with the Independent Advisor’s Report, as well as a notice of meeting of
secured creditors of the company, to the company and its secured creditors
[section 46]. The meeting of secured
creditors convened will then make a decision whether to approve or reject the
proposal [section 46(3)]. If approved, the Special Administrator will then
implement the scheme [section 47] To the question, whether the
bodies/entities were public authorities and whether their acts made in
exercise of statutory powers conferred by Act 587 were amenable to judicial
review, based on the authorities referred to this Court’s attention, I am of
the view that the answer to this question is, in the words of the Court of
Appeal in Tenaga Nasional Bhd v. Tekali
Prospecting Sdn Bhd (2002) MLJ
707at 716, “It depends”. It is abundantly clear that the fact that the tasks
conducted have been made pursuant to a statutory provision does not
necessarily mean that all matters connected thereto are the “decisions of a public authority” attracting the court’s powers of judicial
review. The exercise of statutory powers has been held to be amenable to
judicial review in O.S.K & Partners
v. Tengku Noone Aziz & Anor (1983) 1 MLJ 179. In Ganda Oil Industries Sdn Bhd & Ors v. Kuala Lumpur Commodity
Exchange & Anor (1988) 1 MLJ 174] it has been held to be
otherwise. In the Tenaga Nasional Bhd’s case, where Tenaga Nasional Bhd, prima facie, can be considered to be a
public authority because it was exercising statutory powers, the Court of
Appeal held- “..It depends. If the activity of the appellant in the
private law sphere is called into question e.g. the alleged wrongful
allotment of shares, the alleged removal of a director and the like, then,
plainly judicial review will not lie.
On the other hand if the activity complained of falls within the
public law environment, then of course judicial review is available.” The learned Judge held that the Workout
Proposal in this case did not come within the purview of a “public
authority” in O.53 r. 2 (4) of the Rules but concerns commercial
transactions made by persons and bodies who are private entities. The learned Judge agreed with the decision
of Faiza Thamby Chik J in Wong Koon Sen
v. Rahman Hydraulic Tin Bhd & Ors (2002) 1 MLJ 98. The Applicant in that case had sought for
an order of certiorari to quash various decisions of the Special
Administrator. Faiza J, on the facts before him, held that the 1st
Respondent, being a limited company incorporated under the Companies Act
1965, was a private entity and not a public authority by reason of the
Special Administrators being deemed in law to be its agents under section 32
of Act 587. Faiza J. further held that
all of decisions of the Respondent in that case were decisions of a private
entity, i.e. a business entity in the field of “private law” and did not have
the character of “public law”, and accordingly were not and should not be
subject to judicial review. Low J. came
to the same conclusion in respect of the Workout Proposal on the facts in this
case and held that “The infusion of
public element and public interest does not ipso facto make it a decision of
a “public authority”. With the exception of the reasoning given
by reference to a rule of procedure ( i.e. O.53 of the Rules) as a basis for
making the decision that he did, I hold
that Low J. was right in taking into consideration Faiza’s J. reasoning and decision
and of adopting the same to the circumstances of the present case. Danaharta, prima facie, can be
considered to be a “public authority” because of the statutory powers
conferred upon them. Be that as it may,
for the Appellants to succeed in the matters under challenge, it must
fall within the ambit of a “public” law. I hold, in the circumstances of the
present case, the learned Judge was right when he ruled that in exercising
the duty of considering the Special Administrators’ Workout Proposal in
respect of the proposed sale of the land in issue and in approving the same,
this activity was essentially one falling within a commercial environment under
the realm of private law, and not under public law. The Independent Advisor, clearly a
private entity, whose advise is required to be transmitted onwards for the
consideration of secured creditors of the 6th Respondent at a
meeting for a “decision” convened for that purpose, cannot in my respectful view,
also be considered to be a “public authority”. The advise of the Independent
Advisor in respect the proposed sale of the land is clearly a matter of a
commercial transaction and cannot and should not be the subject matter of
judicial review. Further, a “proposal” by the Special
Administrators and approval of such a “proposal” by Danaharta
is clearly not determinative of the matter in issue by reason of the fact
that the “proposal” has to be made the subject of “advise” by an Independent
Advisor. Then again, an advise is but an advise. It may be accepted or it may
also be rejected. At the end of the
day, as far the facts of this case is concerned, if at all there was a “decision”, it was that of the secured creditors of the company who was
at liberty to approve or reject it. Thus,
a notice issued for a meeting for the consideration of such a commercial
transaction clearly does not fall within public law but private law. The
decision of the secured creditors in respect of a sale of a particular asset
of a distressed company certainly does not fall within the realm of public
law warranting a public law remedy. Whether
the Exceptions to the Rule in Foss v. Harbottle applicable? The learned Judge held that he was
unable to see any support that may be garnered by the Appellants in
commencing this derivative action for the purpose of seeking public law
remedies by way of judicial review under O.53 and the application could be
dismissed on this ground alone. In making his decision the learned Judge
did not accept the Appellants’ contention that the Appellants were entitled
to institute these proceedings in a representative/derivative capacity by
reason of the Special Administrators having the monopoly of the right to sue
in the name of the company pursuant to section 30 read with section 33 and
paragraph 8 Second Schedule to the Act 587 and Article 70 of the company’s
Articles of Association. I
am in agreement with this decision of the learned Judge. A derivative action is
intended to protect the rights of minority shareholders. The test of its
applicability is to be found in the element of control, particularly de facto
control, over the litigation machinery of the company. It is but a procedural
devise based on the premise that the company which has been wronged is unable
to sue because the wrongdoers are themselves in control of its decision
making organs and will not, for that reason, permit an action to be brought
in its name. In such a circumstance, a minority shareholder may bring an
action on behalf of himself and all the other shareholders of the company,
other than the defendants. On the facts of this case it is not in
issue that the Appellants were not minority shareholders but majority
shareholders holding together 60% interest in the company as well as being 3
of the 4 Directors. In these situation the learned Judge was right in making
the decision that he did. Derivative actions are only permitted within the
five exceptions to the rule in Foss v.
Harbottle disallowing minority shareholders locus standi to remedy wrongs to the company and that none of the
permitted exceptions occur on the facts of the present case for the
Appellants to take capacity. It was therefore
clearly wrong for the Appellants to have framed the title of these
proceedings in a representative and derivative capacity for the benefit of
the company. Whether
there was an arguable case? Has the Appellants discharged the
burden of establishing an arguable case in this case? The Learned Judge concluded, having regard
to the factual background set out in the affidavits and the Statement filed, that
there was no arguable case. The Appellants complaint in relation to
the Workout Proposal was on grounds of irrationality and procedural
impropriety as reasons warranting the court’s interference. Irrational because the Appellants say that
the price concluded for the sale of the land was too low. It was contended that the correct value of
the land in issue was RM15,000,000.00
and not RM7,600,000.00 by reason of the Appellants having rejected other
offers to purchase the property in issue in the last quarter of 2001 in that
valuation. It was also contended that there was procedural
impropriety because the Appellants have not been given an opportunity to be
heard. The Appellants’ contention was
that they were only aware of the Workout Proposal on 24.9.2002 upon receipt
of the Special Administrator’s Notice dated 19.9.2002. From the Appellants’ own evidence as
held out in their supporting affidavit it is abundantly clear that the
Appellants were quite involved in the sale of the property in issue at all
times having participated in the several transactions [Appendix 1 to Exhibit “TSF-2”
pages 194 – 323 Appeal Record] and the letters referred therein and sent by
the Appellants in Exhibit “TSF-2” [pages 222, 224, 227, 228, 232 of the Appeal Record]. There clearly was no substance or ground to
support the Appellants’ complaints. There clearly is no point for further
investigation on a full inter partes
basis. On the facts of this case I hold the learned Judge was right in
concluding that there is no arguable
case. To conclude, the test as enunciated by
the Supreme Court in Tuan Haji Sarip
Sarip Hamid had clearly not been met on the facts of this case. The Learned Judge was right in refusing to
exercise his discretion in granting leave. The issues raised by the Appellants
were such that it merits refusal of leave in
limine and that no useful purpose would be served by re-ventilating these
arguments at the hearing of the substantive motion. In these circumstances, I would dismiss
this appeal with costs and affirm the decision of the learned Judge. Dated 10th February
2006. DATIN
PADUKA ZALEHA ZAHARI
Judge Court of Appeal
___________________________________________________________ Note:
For
the Appellant - Encik Lim Wei Chun
Tetuan Lim Whei Chun
Peguambela & Peguamcara
9559 Jln. Tg. Minyak 75250 Melaka For
the Attorney General Dato’ Mary
Lim Thiam Suan
Senior Federal Counsel
Bahagian Guaman, Jabatan Peguam Negara,
Pusat Pentadbiran Kerajaan Persekutuan,
62512 Putrajaya For
the 1st Respondent: Ms. J. Kannaperan Tetuan Shearn Delamore & Co. Peguambela & Peguamcara
1 Lebuh Ampang 50100
For
respondent (2)-(4) Ms. Anita
Ibrahim Allen & Gledhill For the 5th Respondent Encik G. Balan |